Companies like Baidu, Alibaba and Tencent have done extremely well and have huge amount of cash reserves, which gives them the ability to spread out, he said.ET Bureau | May 12, 2017, 08:53 IST

Chinese investors are different from their American counterparts in India in the sense that they are not investing merely to cash out, said Tej Kapoor, executive director at Fosun India Management, the domestic arm of Chinese conglomerate Fosun International. Chinese investors are very patient, true to their thesis and focussed on what they know, Kapoor said in an interview.

Edited excerpts:

There is huge interest in Indian startups from Chinese investors. What is driving that?

The path to such investments in India was paved by some of the Chinese mobile phone manufacturers such as Xiaomi, Huawei, and OPPO — all wanting to venture into the Indian market. In China, there is a lot of money that has been generated through IPOs and mergers and acquisitions.

Companies like Baidu, Alibaba and Tencent have done extremely well and have huge amount of cash reserves, which gives them the ability to spread out. Not only them but many Chinese people who have grown their businesses over the last 10 years are now venturing outside.

Rich Chinese are buying properties in Hong Kong, Singapore, Van Couver, New York, London. There is a splurge of both institutional and private money. Also, China is still a massive economy but it is not growing as fast as India.

How do you differentiate Chinese investors from their US counterparts?

Lot of US investors came to India with the philosophy of purely making money. What is different is that the Chinese are very smart at looking long-term. They are not saying that I want to take the money and get out. They want to stay here, like it is for the Chinese manufacturers. They are not investing to cash out.

They are investing to run sustainable businesses and make a stake here. That is quite fundamentally different. And they are very patient. They are very true to their thesis and they are focussed on what they know.

What is the most striking similarity in the two ecosystems?

Many of the problems that were solved in China were through technology, and we have the same problems here in India. For instance, the kinds of frauds happening are very similar. So my Chinese colleagues ask me, how do they do fraud detection there? A US colleague may not have asked the same question. In a way, (the Chinese) market is quite similar to India.

Is the modus operandi different?

Not many Chinese venture capitalists have entered India. It’s mostly the big investor groups. From the fund side, very small funds have come. Their modus operandi is standard, but having a team on ground makes a lot of difference in terms of knowledge-sharing. Fosun, for the last two years, had been scouting for deals and we were able to close transactions after we hired people on ground.